Bitcoin (BTC)

• The podcast host notes that Bitcoin's price broke $122,000.
• Michael Saylor (of MicroStrategy) recently made a new purchase of $472 million worth of Bitcoin at an average price of $111,000.
• The host personally states they are not buying Bitcoin at the current $122,000 level.
• They prefer to buy during periods of "macro turmoil" when asset prices are correlated and fall together, citing a recent example when Bitcoin dropped to $98,800 during Middle East tensions.
• The host references the common wisdom that investors have historically not lost money on Bitcoin if they hold for at least four years.
• Risk Mentioned: Short-term volatility can be extreme. An example is given where an investor buying at $106,000 would have had to endure a -29% drawdown and wait six months just to break even.

Takeaways

• For Long-Term Investors: If your investment horizon is 4 years or longer, the speaker suggests that buying Bitcoin could still be a viable strategy, but you must be prepared to "hodl" (hold on) through significant price drops.
• For Tactical Investors: Consider waiting for market-wide fear or "macro turmoil" to purchase Bitcoin at a discount, as these events can provide better entry points.
• Risk Awareness: Be prepared for high volatility. A nearly 30% drop is not unusual, and it can take months to recover from a poor entry point.

MicroStrategy (MSTR)

• The host describes MSTR as a "Bitcoin derivative" or a "company built on Bitcoin." Its fate is directly tied to Bitcoin's price.
• The core strategy of the company is to use its stock and debt to acquire more Bitcoin, aiming to increase the amount of Bitcoin per share over time. The speaker refers to this as generating a "yield" on top of Bitcoin's performance.
• Performance: The host argues that MSTR has historically outperformed and will continue to outperform Bitcoin.
  • 1-Year Return: MSTR +211% vs. Bitcoin +104%
  • 1.5-Year Return: MSTR +710% vs. Bitcoin +152%
• Valuation: The key metric discussed is the Price to MNAV (MicroStrategy Net Asset Value), which is currently 1.82. This means the stock is trading at a 1.82x premium to the value of the Bitcoin it holds.
  • The speaker considers 1.82 to be on the "lowest end of the range for the past year" and therefore not "that expensive historically."
  • They would personally "hold off" on buying if the Price to MNAV reached a level like 3.5.
• ATM (At-The-Market) Offerings: The host is "pro-ATM," viewing it as a key part of the strategy. By selling stock when the Price to MNAV is 1.82, the company is effectively "selling a dollar for $1.82" to buy more Bitcoin, which is beneficial for existing shareholders.
• Risk Mentioned: The investment is a leveraged bet on Bitcoin. The host states very clearly: "If Bitcoin goes to zero, MSTR goes to zero."

Takeaways

• For Bitcoin Bulls: MSTR is presented as a way to get leveraged exposure to Bitcoin. If you believe in Bitcoin's long-term appreciation and in Michael Saylor's strategy, MSTR may offer superior returns.
• Valuation Check: The Price to MNAV is the key metric to watch. The speaker suggests the current level of 1.82 is a historically reasonable valuation, implying it could be a decent entry point.
• Understand the Strategy: Investing in MSTR is a bet on the company's ability to continue issuing shares and debt to acquire more Bitcoin in a way that benefits shareholders.

MicroStrategy Preferred Stocks & Bonds

• The host mentions that MSTR comes in "different flavors" for investors with different risk tolerances.
• Preferred Stocks (Strike, Strife, Stride):
  • These are presented as a less volatile way to invest in the MicroStrategy thesis compared to the common stock (MSTR).
  • The company is now using an ATM to issue these preferreds at a premium to their par value (e.g., selling $100 of notional debt for $124), which generates immediate cash for the company.
  • The speaker's favorite is Strike, noting it has a yield of ~6.3% - 6.5% and includes a "call option."
• Convertible Bonds (BMAX):
  • The speaker personally likes BMAX, calling it "steady, Eddie."
  • They believe these "converts will prove very valuable in the future."

Takeaways

• For Conservative Investors: The preferred stocks (Strike, Strife, Stride) offer a way to get exposure to the company's strategy with lower volatility and a fixed-income-like yield.
• Alternative Exposure: The convertible bonds (BMAX) are another option, described as a "steady" investment that could become very valuable over time.

Options on MSTR

• The high volatility of MSTR stock ("violent dumps, the violent bounces") makes it very attractive to active options traders.
• Strategies Mentioned:
  • Selling Puts: Traders can sell puts to collect premium, betting that the stock will not fall below a certain price.
  • Selling Calls: Described as a very risky strategy, this involves betting that the stock has peaked and will fall.
• The host frames this as a "do-it-yourself" approach for sophisticated traders looking to generate yield from volatility, not as a strategy for long-term investors.

Takeaways

• For Advanced Traders Only: The extreme price swings in MSTR create opportunities for options trading.
• High Risk: This is not a buy-and-hold strategy. Selling calls is explicitly called out as being very risky. This is for individuals who actively manage their positions and understand options well.